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Venezuela: Sweetening The Rhetoric On Brazilian Ethanol
By Mr Ethanol | April 19, 2007
Summary
At the April 16-17 South American Energy Summit, Venezuelan President Hugo Chavez toned down his rhetoric against ethanol. In making this conciliatory gesture toward Brazil, Chavez is trying to avoid a serious rift between Caracas and Brasilia that might undermine his regional ambitions. However, he is likely to continue to work behind the scenes against U.S.-Brazilian ethanol cooperation.
Analysis
Venezuelan President Hugo Chavez backed away from his opposition to Brazil’s ethanol expansion plans at the April 16-17 South American Energy Summit on Venezuela’s Margarita Island. This was a diplomatic gesture aimed at avoiding a widening split in the region — though Chavez likely will continue to attempt to undermine Brazil’s ethanol ambitions through indirect means.
Chavez and his ally, Cuban leader Fidel Castro, began criticizing ethanol as a threat to the world’s food supply following the formation of a U.S.-Brazilian ethanol alliance during U.S. President George W. Bush’s trip to the region in March. Chavez and Castro are concerned that a U.S.-Brazilian-backed expansion of ethanol production in the region — particularly in Central America and the Caribbean — would pose a challenge to Venezuela’s oil-based diplomacy as embodied by its Petrocaribe initiative, launched in 2005.
At the summit, attended by all 12 South American heads of state, Chavez said he does not oppose ethanol as a strategy as long as it does not compromise food production or prices. He further said he welcomes ethanol to the region’s energy mix and intends to restart Brazilian ethanol imports to Venezuela, which were suspended in October 2006. He also called on the United States to stop using corn-based ethanol and to reduce its tariff on Brazilian sugarcane-based ethanol.
Although Chavez had two other options — to ignore ethanol as a topic or continue his anti-ethanol rhetoric — he chose to be conciliatory in an effort to maintain the appearance of general unity and cooperation on energy matters in the region. Energy is the most tangible route to expanding regional cooperation and integration in South America. Thus, if energy cooperation fails, political cooperation also is likely to suffer — and incentives to cooperate would diminish.
Chavez’s statements, however, do not mean he is capitulating. Rather, he is attempting to change perceptions that Brazil’s ethanol ambitions are linked inexorably to the U.S. partnership and focus perceptions instead on ethanol as a regional desire — while simultaneously criticizing the U.S. approach to ethanol.
Brazil expects to benefit both financially and politically from sharing its ethanol technology with poorer countries that are traditional sugarcane growers, and can bypass U.S. ethanol tariffs because of special waivers. In addition, Brazil and the United States are working together to give birth to ethanol as a global commodity by establishing universal quality standards. Knowing Brasilia will not change its mind on this joint project, Chavez is trying to change the perception that the project amounts to a geopolitical defeat for his country. Read on…
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